Oil Keeps Dropping In Price, Dollar Keeps Rising In Value, Stocks Are Likely To Keep Gaining
NEW YORK (Reuters) - Bolstered by falling oil prices and a rising dollar, U.S. stocks could extend their modest gains next week.
Oil’s downward trend helped boost consumer spending slightly in the past month, with crude hitting a three-month low below $114 a barrel on Friday. But its path remains volatile, prompting some investors to remain cautious about the market.
The dollar’s recent jump suggests to some that the health of the U.S. economy could improve. The U.S. economy began weakening before others and now that investors are seeing poor economic data from Europe and Asia, some think the United States is closer to a recovery than others.
“For the past two years, crude has followed the dollar almost lock-step,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco. “The strength we’ve seen in the dollar is almost certainly helping bring crude down. At this point, as you move backward, it actually acts as a stimulus on the economy.”
Next week, investors will get further data after quarterly earnings from retail giant Target Corp (TGT.N: Quote, Profile, Research, Stock Buzz), home improvement retailers Home Depot Inc (HD.N: Quote, Profile, Research, Stock Buzz) and Lowe’s Companies Inc (LOW.N: Quote, Profile, Research, Stock Buzz), and tech bellwether Hewlett-Packard (HPQ.N: Quote, Profile, Research, Stock Buzz).
This comes after J.C. Penney Co Inc (JCP.N: Quote, Profile, Research, Stock Buzz), Wal-Mart Stores Inc (WMT.N: Quote, Profile, Research, Stock Buzz), Nordstrom Inc (JWN.N: Quote, Profile, Research, Stock Buzz), and Macy’s Inc (M.N: Quote, Profile, Research, Stock Buzz) posted earnings this week that exceeded analysts’ estimates, but issued cautious forecasts for the second half of the year amid concerns on slow consumer spending.
But the focus next week will be on oil and the dollar.
Oil prices fell below $114 a barrel on Friday, down from $115.20 a week ago on growing concerns about demand in industrial nations and the stronger dollar.
Equally important, crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11 as growing global economic problems and high fuel prices have cut demand in the United States and Europe.
On Friday, the front-month U.S. crude oil futures contract fell $1.24 to settle at $113.77 a barrel — down 23 percent from July’s record on the New York Mercantile Exchange.
But investors are keeping a wary eye on the continued fighting between Russia and Georgia. Russian armed forces have occupied parts of Georgia since repelling a Georgian attack last week on the tiny pro-Russian separatist territory of South Ossetia, which in the 1990s threw off control of Tbilisi, the capital of Georgia.
“Any geopolitical developments, whether it be the Iranian situation or further developments with Russia and Georgia, those will influence oil markets,” Hembre said.
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yeah because the economy is so fucked because of bush isnt it
doesnt look to be in that bad shape to me.
August 16th, 2008 at 3:13 amwow! cheap oil has an effect on our economy?
Just think if we took control of that essential commodity.
August 16th, 2008 at 4:07 amOMG Bush destroyed the economy. It’ll never get better unless our savior Obama’s elected and we give him all our money to fix all the problems he tells us we have. This is just Bush’s fascist nazi propaganda.
You know what the scary thing is, that’s basically word for word what a liberal would/will say
August 16th, 2008 at 6:11 amdoesnt look too bad and its only getting better. just wait until the dollar gains more. things will really be going well
August 16th, 2008 at 6:28 amThere is a drawback to declining oil: if the price drops to a level where the American public is no longer concerned, the demand for increased domestic drilling and production might wane.
Still, this is very good news. Of course the MSM will downplay or even ignore this.
August 16th, 2008 at 7:54 am